EXHIBIT
10.38


 


[Jackson Hole Letterhead]


 


December 18, 2003


 


AXCESS Inc.


3208 Commander Drive


Dallas, Texas 75006


 


Re:                                     Series
C Preferred Stock


 


Ladies and Gentlemen:


 


Jackson Hole, hereby notifies and directs Axcess
International Inc. (the “Company”) to convert Series C Preferred
Stock held by Jackson Hole at December 15, 2003 into Voting Common Shares of
the Company.


 


1.                                       Issuance
of Common Shares.  Jackson Hole
directs the Company to issue 173,858 shares of Common Stock in exchange for all
shares of Series C Preferred Stock and all accrued dividends held by Jackson
Hole at December 15, 2003.


 


2.                                       Securities
Act Legend; Registration Rights.


 


2.1                                 The
Shares will not be registered under the Securities Act of 1933, as amended (the
“Securities
Act”).  Certificates
representing the Shares shall bear a restrictive legend substantially to the
effect of the following:


 


THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, OR APPLICABLE STATE SECURITIES
LAWS, OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION.  THEY MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THOSE SECURITIES LAWS OR
PURSUANT TO AN EXEMPTION THEREFROM.


 


3.                                       Representations
and Warranties of Jackson Hole. 
Jackson Hole hereby represents and warrants to the Company as follows:


 


3.1                                 Jackson
Hole is acquiring the Shares for its own account, for investment and not with a
view to the distribution thereof within the meaning of the Securities Act.


 

















 


3.2                                 Jackson
Hole understands that the Shares have not been registered under the Securities
Act, by reason of their issuance by the Company in transactions exempt from the
registration requirements of the Securities Act, and that Jackson Hole must
hold the Shares indefinitely unless a subsequent disposition thereof is
registered under the Securities Act or is exempt from such registration.


 


3.3                                 Jackson
Hole further understands that the exemption from registration afforded by Rule
144 (the provisions of which are known to it) promulgated under the Securities
Act depends on the satisfaction of various conditions, and that, if applicable,
Rule 144 may afford the basis for sales only in limited amounts, after
compliance with the holding periods and other provisions thereof.


 


3.4                                 Jackson
Hole understands that its investment hereunder involves substantial risks and
represents and warrants that it has made such independent examinations and
investigations of the Company as it has deemed necessary in making its
investment decision, and Jackson Hole further represents and warrants that it
has had sufficient access to the officers, directors, books and records of the
Company as it has deemed necessary to conduct such examination and
investigation and make such investment decision.


 


3.5                                 Jackson
Hole is able to bear the economic risk of the investment contemplated by this
agreement and has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the investment
contemplated by this agreement.


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  JACKSON HOLE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
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